⚡ Get All Content for 20% Off ⚡

McDonald's Makeover Promises to Be Pricey for Franchisees With a new customizable burger platform and minimum wage on the agenda, McDonald's image revamp may end up costing franchisees.

By Kate Taylor

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Monica Dipres

McDonald's needs to make changes – fast. But will franchisees be willing to cough up the extra bucks?

In a discussion at the UBS's Global Consumer Conference in Boston today, McDonald's executives said their focus is on "reigniting momentum." The fast-food giant had a horrific 2014, posting some of its worst declines in more than a decade.

"As we look to the future, we recognize the urgent need for a reset in the business," said chief administrative officer Pete Bensen. "These include fixing the fundamentals that are key to our business, while making bigger bolder moves in areas that have a meaningful impact with our customers."

Making these changes takes cash. McDonald's CFO Kevin Ozan said in the discussion that McDonald's was still on track to return $18 to $20 billion to shareholders from 2014 to 2016, due in part to money saved and gained by cutting new openings in struggling markets and refranchising efforts. However, franchisees will find themselves shouldering some of the costs of McDonald's image makeover.

Two of the most publicized strikes against McDonald's reputation are the chain's alleged food quality and labor practices. In 2015, McDonald's is rethinking both.

Related: Unions, Charity Accuse McDonald's of Avoiding $1.1 Billion in Tax

McDonald's "Create Your Taste" customizable burger platform has the potential to bring a fast-casual breath of fresh air to a company that has become the face of fast food. McDonald's is rolling out the platform in Australia this year, as well as expanding the test in the U.S. from 15 restaurant to up to 2,000 locations.

However, bringing interactive kiosks and other equipment needed for Create Your Taste isn't cheap. Installing the new platform costs a restaurant $100,000 to $150,000. Ozan said that McDonald's may help contribute to the cost to speed up roll out, but did not go into details on how the company would assist franchisees.

McDonald's executives also touched on the minimum wage question – another cost that will likely be shouldered by franchisees.

"A big part of Mike [Andres, McDonald's U.S. president's] turnaround agenda in the U.S. is, "What are we doing around the employment image and our employee-employer relationships?'" said Bensen. "In the U.S., 90 percent of our restaurants are franchised, so any minimum wage discussion or increase is really significantly impacting small business men and women around the U.S."

Bensen said that while the issue was "top of mind," any minimum wage changes would be staged, instead of all at once, to better prepare franchisees for increased costs.

For months, McDonald's franchisees have been demanding that corporate make significant changes to help boost sales. The company is finally taking steps towards the franchisee-approved plan to simplify and streamline the menu. If franchisees will respond as positively to other, more costly changes remains to be seen – and will likely depend on if McDonald's can prove the reputation makeover is worth the cash.

Related: McDonald's Takes a Cue From Chipotle With Latest Menu Change

Kate Taylor

Reporter

Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Business News

Costco CFO Reveals Uncertain Fate of $1.50 Hot Dog and Soda Combo

CFO Richard Galanti reveals that the price will stay the same — but only "for a while."

Business News

The Most Unexpectedly Popular Side Hustle of the Decade Has Low Startup Costs and High Markups

A new report shows that vending machines are a popular investment — and the industry is set to grow up to $3 billion by 2031.

Marketing

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

Business News

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.